Table of ContentsIntroductionStrategic AnalysisStrategic DirectionBusiness StrategyComparative AdvantageBusiness StrategyIntroductionL'Oréal is one of the largest cosmetics and beauty brands in the world. The strategies followed by this company have enabled it to remain in the top position among its competitors. This multinational cosmetics company invests, innovates product varieties and also markets them using its strategies to increase its consumer base. L'Oréal's major investment lies in its CSR (corporate social responsibility) strategies, where it aims to increase its customer base to reach 2 billion customers by 2020. This can be accomplished by identifying and analyzing business units of the company through high growth prospects and analyze the different strategies implemented to achieve this. By studying L'Oréal's journey over the years, the brand image remains within a portfolio which has become its major development factor. This has clearly become the company's competitive advantage. L'Oréal is a high-turnover company that uses its profits to invest in its R&D department to motivate innovation. It also uses its capital to produce a large number of units based on demand. Horizontal integration, vertical integration and strategic alliances help L'Oréal establish its presence worldwide. In this report, we critically analyze strategic capability, strategy formulation and implementation with reference to theories from strategic business management concepts. Say no to plagiarism. Get a tailor-made essay on “Why violent video games should not be banned”?Get the original essayStrategic analysisGeneral environment and trend: A Pestle analysis is carried out to identify the different forces in the macroenvironment of L'Oréal.Political and legal forces : Laws and regulations are established by the government regarding the recruitment of professionals from various multiracial countries to L'Oréal (Hae-Jung, 2013). L'Oréal products are subject to approval by the FDA (Food and Drug Administration). The FDA ensures that L'Oréal products do not directly or indirectly harm the consumer. The regulation also orders L'Oréal to list the ingredients used in the preparation on the product label. Economic Strengths: Since L'Oréal is based in Paris, France. This has contributed to the constant increase in GDP since 2016. The country is also experiencing a constant increase in its population, which means that there is also a constant increase in the number of consumers in the country. Social forces: Consumers are now increasingly concerned about the situation. their health, so they prefer products that are more organic and do not harm their skin. This has become one of the major concerns of this cosmetics brand. Technological Strengths: Convergence solutions (i.e. hybrid cosmetic solution based on medical chemicals and other technologies) and biotechnology are now emerging as a latest technology trend for L'Oréal as as Korean cosmetics. brands have already adapted this technique on their brands. Environmental Forces: When it comes to environmental forces, demographics play an important role in affecting the company's capabilities. In recent years, it has been observed that women's beauty concerns have shifted towards men, as men place greater importance on their personal appearance than women.Specific environment L'Oréal is developing a new and improved tool that could provide a comprehensive presentation of information. regarding their products, to encourage their consumers to self-study their own cosmetic consumption choices. L'Oréal's supply chain has impacted various stakeholders along the value chain who could impact the environment. The R&D department carried out research and developed a model known as SPOT (Sustainable Product Optimization Tool). This model allows the company to test different designs of its new products likely to have an impact on the environment and society. Makes the magnitude of the impact a tangible entity, thereby helping to minimize the effects caused by products in various areas such as packaging, formulation of both renewable and non-renewable chemical ingredients, and benefits social aspects of the product. In 2017, all L'Oréal products were analyzed using this tool before being placed on the market. Competitors and Internal Analysis As one of the leading cosmetics brands, L'Oreal faces competition from various other brands. The summary of the company's competitors and their characteristics are presented below. L'Oreal adopts the differentiation strategy to stay ahead of its competitors because they have a larger target market. Their product divisions are mainly in the following diversified markets, such as multicultural new product diversification. Market DevelopmentStrategic DirectionBusiness StrategyIn this section, strategies on how Loreal creates its own competitive advantage and allows it to stay ahead of its competitors will be studied. To further break down Loreal's competitive advantage, there are two other main types of advantages that companies can have. These are comparative and differential advantages.Comparative advantageThe impression of L'Oréal's unique strategy Universalization strategy We are convinced that there will not be a single, unique model of beauty at L'Oréal. But it is an infinite diversity which changes according to times, cultures, histories, individuals..etc. The definition of L'Oréal's strategy is: “Universalization is globalization that respects differences. The differences lie in desires, needs, tradition.” They believe that product innovation must meet cultural expectations, it has successfully adapted to the specific cultural differences of the beauty market across the world. L'Oréal currently has six research and development centers around the world, two in France, one in the United States and one in Japan. In 2005, L'Oréal established a research and development center in Shanghai, China, and the latest one is in India. Low Cost Competitive Advantage or Differentiation Strategy L’Oréal uses a hybrid differentiation strategy. It is about reducing costs and therefore being able to reduce the price when necessary while increasing the perceived value. Through the combination of large available capital and high technical capabilities, L'Oréal has access to the resources to produce at scale while using its strong research and development department to drive innovation. Resource utilization optimization capabilities promoting high productivity and L'Oréal's efficient production and distribution process across a large number of channels provide a favorable scenario for reducing costs. At the same time, L'Oréal's actions aimed at creating an emotional connection with its consumers instead of only highlighting its products, clearly show thecompany differentiation strategy. During its consolidation process, the company has always paid attention to building a strong brand strategy, being widely recognized and holding strong customer loyalty. L'Oréal's marketing strategies have always been focused on bringing customers the benefits and reliability of all products, and ensuring that the perception of superior quality is stronger than that of any other competitor. The combination of these strategies and minor adjustments made from time to time over the years have made L'Oréal the leader and benchmark in the beauty market. Business Strategy Expanding through acquisition L'Oréal's growth strategy has been driven by both internal development and the acquisition of companies already active in the cosmetics industry. In particular, external growth through acquisition is part of L'Oréal's long-term strategy, with a long-term annual growth objective of 10%. This option was also facilitated by the group's liquidity and low debt. Purchasing more companies allows the group to reach the critical size necessary to exploit economies of scale both in R&D activities and in marketing and distribution. Acquisitions also allow L'Oréal to quickly expand its geographic horizon and develop its market segments. The current portfolio of 25 prestigious brands is the result of a series of acquisitions started many years ago. Global Strategy L'Oréal is a global company with a presence all over the world. French cosmetics company (SFTIC) created more than 100 years ago, which has become a multinational company present in 140 companies and regions with more than 88,900 employees. Its global product portfolio is represented by 32 global brands, controlling 19.9% ​​of the global cosmetics market. They have a very well-known and reliable image because they have been around as a quality brand for a long time. They also have a professional channel (Keratase, Redkin, L'Oréal Professionnel) used and approved worldwide in high-end salons. L'Oréal Laboratories have developed revolutionary innovations such as the first soap-free shampoo, the first rapid bleaching agent, which first highlights the enhancing shampoo, the first coloring without ammonia or artificial skin called Episkin. With the slogan “Because we are worth it”, they push the message “beauty for all” to attract a wide range of consumers, regardless of ethnicity, gender and age. L'Oréal has chosen a unique strategy: the popularity of it. This means capturing, understanding and respecting the globalization of differences. The difference lies in desire, demand and the traditional order aimed at providing tailor-made beauty and satisfying the wishes of consumers around the world. Business Strategy The detailed action of business level strategies is to deliver value to customers and gain competitive advantage by exploiting core competencies in specific, individual product or service markets. In other words, firm-level strategy aims to create differences between firm position and rivalries within an industry. In order to determine the situation, companies must decide whether they should operate differently or carry out different activities compared to their competitors. In business-level strategy, there are two types of competitive advantage: one is lower cost, the other is uniqueness (or differentiation). Companies should compare the types of competitive advantages that would create more.